A little bit of history

The Internet revolution couldn't have arrived at a more appropriate time. Not only was it at the end of a century, but it was at the end of a millennium. This allows history to place a nice neat date on the start of a new period in the history of civilisation - the year 2000 - the beginning of the third millennium, the end of the Industrial Age and the start of the Information Age.

Decades from now, this revolution will be seen as an instantaneous transition, from one system of civilisation to another. Few will dwell on what happened during the transition itself. It will be treated more like the metamorphosis of a caterpillar into a butterfly - a mysterious transformation, where the details of the transition processes are far too complex to be explained.

However, science does have some idea as to how these complex system transitions occur. They may not know every detail of a transition – such as the exact sequence of chemical events that occur when a caterpillar changes into a butterfly - but, the generalities of the process can be explained it terms of a mathematical concept known as Chaos Theory.

This theory explains how complex systems can self organise and then, perhaps through a seemingly trivial event, become totally disorganised and then spontaneously reorganise themselves into a completely different state of organisation. It happens when a caterpillar changes into a butterfly. It happens when a revolution overtakes a civilisation. It is happening now as the Industrial Age gives way to the Information Age.

Observing and experiencing the rapid changes that are taking place, as the Industrial Age gives way to the Information Age, is the business world equivalent of being present in the cocoon of a caterpillar while the mysterious events – which turn the caterpillar into a gooey mess and then turn that gooey mess into a butterfly – are occurring.

At the turn of the century, the caterpillar was the social and business organisation of the Industrial Age. The butterfly is the new kind of business organisation that is emerging in the Information Age. The gooey mess in between is epitomised by the failures of hundreds of early dot-com startup companies as they struggle to cross the divide between the Industrial Age and the Information Age – handicapped by knowing only the methods and strategies appropriate for the pre transition age. These pioneers were the first to be exposed to the unprecedented changes brought about by the new communication technologies.

It is easy to put the failure of the early dotcoms down to poor management, unrealistic business plans and lack of proper control and organisation – as so many business commentators did at the time of their demise. But, this is to ignore something more probable: the use of totally inappropriate business strategies?

Consider for a moment the decision making of the various funding bodies responsible for providing the billions of dollars of venture capital to all those hundreds of failed dot-coms. Wouldn't the financiers have critically assessed the ideas, looked carefully at all the business plans and made sure that the principals had suitably impressive track records. Upon what other grounds could they have justified the handing over of billions of dollars to those early pioneers?

There were so many errors of judgement, on such a grand scale, that it was unlikely to have been a result of incompetence alone. It is much more probable that the criteria used for making investment decisions was at fault. This calls into question the value of basing investment decisions upon the quality of ideas, plans and managerial competence.